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Positive Outlook For Agricultural Prices But Not For World’s Poorest

by Genevieve Lavoie Mathieu (rome)

Friday, July 25, 2014

Inter Press Service

ROME, Jul 25 (IPS) - The official outlook for agriculture up to 2023 carries optimistic forecasts for agricultural productivity and commodity prices but it is unlikely that the benefits will be shared by the world's poorest.

The mix of good and bad news comes in the 2014-2023 Agricultural Outlook, issued jointly by the U.N. Food and Agriculture Organization (FAO) and the Organisation for Economic Cooperation and Development (OECD) this month.

The OECD/FAO Agricultural Outlook examines trends regarding prices, dietary habits and other influencing factors such as production and demand, in addition to assessing the major policy challenges facing the sector.3

This year's Agricultural Outlook, which is the 20th of its kind, "looks at the prospects for developing countries under the assumption that average weather patterns and current policies persist", according to Holger Matthey, an economist at the Trade and Markets Division of FAO and team leader for the Agricultural Outlook.

"It gives an overview of the global market within the next 10 years, assuming that there are no disturbances", Matthey told IPS

Crop prices are expected to stabilise significantly below recent peaks, although they will likely remain above pre-2008 levels, while meat and dairy prices will have reached record highs in 2013/14.

"We are very positive regarding the agricultural outlook for developing countries because they have the resources to expand production and are also expected to maintain strong growth rates in terms of consumption", said Matthey.

Under the assumptions of this outlook, he added, it was found that "more than 80% of additional production will originate from developing countries and 50% of both the additional production and consumption over the next decade will take place in Asia."

But there are still many obstacles in the way of ensuring that everyone can reap the benefits of increased agricultural productivity.

"We still face a challenge with access to food. Higher food prices imposed undeniable hardship on the world's poorest people, who spend a large share of their incomes on food. They also did more harm than good to poor farmers, who are more often than not net buyers of food staples," OECD Secretary-General Angel Gurría said at the launch of the report.

Among others, he said, there is a need "to extend social protection to cushion the effects of price shocks and help farmers manage risks and continue to invest in agricultural productivity so that farmers can respond effectively to price signals", but tackling these challenges "in ways that are both inclusive and sustainable is a formidable challenge."

This year's Agricultural Outlook focuses on the case of India, the world's second most populous country and home to the largest number of food-insecure people, for which the report portrays a "relatively optimistic" scenario, saying that the country is "projected to sustain production and consumption growth of food."

In 2013, India adopted a National Food Security Act (NFSA), designed to ensure greater access to adequate and affordable food. The NFSA entitles more than 800 million people to 60 kg of food grain per person each year at prices that are 90 percent more economical than current retail prices.

According to FAO Director-General José Graziano da Silva, the NFSA – the world's largest right-to-food programme – is something that will have an impact for food security around the globe.

However, the Agricultural Outlook also warns that implementation of the programme will be challenging.

"While there is enough food being produced, the access to food, the distribution of food and the healthy utilisation of food are challenges that remain," said Peter Kenmore, FAO representative in India.

For example, according to the U.N. Children's Fund (UNICEF), 48 percent of children in India are stunted as a result of chronic malnutrition, a condition that has long-term physical and mental development consequences, such as weakening the immune system and decreasing productivity in adulthood.

The challenge is also to be more efficient in terms of infrastructure, including storage and transportation as well as means of delivery

"The circuit of producing, procuring, storing and distributing food to those who lack access, all completed locally, as is accomplished in many places covered by the Zero Hunger Programme in Brazil, is worth pursuing," Kenmore told IPS.

The Zero Hunger Programme was launched in 2003 by the Brazilian government with the aim of eliminating hunger and poverty.

However, Kenmore warned that "the fact that the price of subsidised food grains is 90 percent cheaper also represents a strong incentive for opportunists to obtain this subsidised food and resell it on the open market."

"At the moment there are millions that are benefiting from the Public Distribution System that is being expanded under the NFSA but many that are not. Exclusion, discrimination and sub-optimal implementation are key concerns", he told IPS.

There is a need to improve accountability and grievance mechanisms to allow people to make a complaint in case they cannot access subsidised food to which they would otherwise be entitled and, said Kenmore, these mechanisms "must not merely be notional but also effective.